British Pubs, Decoder Cards, and the Future of Intellectual Property Licensing after Murphy

Abstract

October 4, 2011 marked a new era in global sports media rights. On this day, the Grand Chamber of the European Court of Justice (ECJ) delivered its judgment in FA Premier League et al. v. QC Leisure et al. & Murphy v. Media Protection Services Ltd (“Murphy”). Murphy decided upon the legality of a scheme whereby the holder of intellectual property rights to a sporting event licenses the right to broadcast the event on a national exclusivity basis.

The central players in the Murphy saga were: (i) the Football Association Premier League Ltd (“FAPL” or “Premier League”), the rights holder who, on behalf of football clubs playing in the Premier League, licensed the rights to broadcast Premier League matches to national broadcasters; (ii) two joint ventures, BSkyB Ltd. and ESPN (“Sky”) and NetMed Hellas SA and Multichoice Hellas SA (“NOVA”), who were the national broadcasters in the United Kingdom and Greece, respectively; (iii) Karen Murphy, a British national who purchased NOVA decoding equipment for personal viewing and subsequently used it to display Premier League matches in her pub in Southsea, England, at a significantly lower cost than a commercial subscription with Sky; and (iv) QC Leisure and AV Station, two British enterprises that arranged for the NOVA subscriptions and imported the decoding equipment, which was subsequently sold to Murphy and others.

The system of nationally exclusive broadcasting rights challenged in Murphy was supported by a combination of private and national measures. First, the typical agreement between the Premier League and a broadcaster contained provisions giving the broadcaster exclusive rights to broadcast the events in one of the EU Member States and requiring the broadcaster to take precautions to prevent individuals situated outside that Member State from accessing their broadcast. Second, in order to uphold the latter provision, the subsequent agreement between the broadcaster and its customers contained terms whereby the customer undertook that the decoding equipment would not be used to access the broadcast outside that Member State. Finally, general copyright law and a specific British statutory provision criminalizing the import, sale, and use of foreign decoding equipment procured through dishonest means further strengthened the enforceability and seeming validity of these contractual arrangements.

This licensing system was challenged in two British cases in which the plaintiffs alleged infringement. Ultimately, two divisions of the High Court of Justice of England and Wales referred a total of eighteen questions (excluding sub-questions) to the ECJ regarding the interpretation and application of various provisions under EU law. The eighteen questions boil down to three principal inquiries: I) Are Member States’ measures discouraging parallel import of broadcasting services compatible with the right of free movement of services protected by Article 56 of the Treaty on the Functioning of the European Union (“TFEU”)? (II) Are the agreements between the Premier League and broadcasters anticompetitive, contrary to Article 101 of the TFEU? (III) How are the several European Directives on intellectual property rights and, in particular, copyright law applied to such broadcasting rights, and to what extent is the proprietary content protected? This Article will address each of these three principal inquiries in order. Additionally, this Article will examine which elements of the licensing system heretofore are consistent with EU law, and analyze the likely ramifications for rights holders and future business strategies available to them.

Keywords: European Union Law, Competition Law, International Trade Law, Sports Management, Sports Law, Competition Policy, New Media, European Union Law, Law, European Law, EU Administrative and Constitutional Law, EU Substantive Law, Fundamental Rights in the EU, EU Competition Law

JEL Classification: C44, D12, K00, K10, K19, K20, K29, K30, K39, K40, K41, K49, O34